Prospectus for Karo Bio’s Rights Issue Available on Web Site

Not for distribution in the US, Australia, Japan, New Zealand or Canada.
The Offer does not apply to persons whose participation requires further
prospectuses, filings or other measures in excess of those implied by
Swedish law.

Prospectus for Karo Bio’s rights issue available on web site

Karo Bio has today announced the prospectus for the forthcoming new
share issue with preferential rights for the Company’s shareholders. The
prospectus is available on Karo Bio’s website at
www.karobio.com/newissue and will also be distributed to the
shareholders registered in the share register on the record date
September 8, 2004.

Terms in brief and time table
Stated terms in brief and time schedule for the rights issue are listed
below.

· Each three shares held entitles to subscribe for two new shares

· The subscription price is SEK 8.50 per share

· Record date for participation in the rights issue is September 8,
2004

· Trading in subscription rights will take place September 13 – 28,
2004

· The subscription period is from September 13 – October 1, 2004

· Prospectus, subscription form and issue statement will be
distributed to Karo Bio’s shareholders beginning September 10, 2004

Huddinge, September 8 2004

KARO BIO AB

For further information, please contact
Bertil Jungmar, Chief Financial Officer, phone +46 8 608 60 52
Björn O. Nilsson, President & Chief Executive Officer, phone +46 8 608
60 20

Facts about Karo Bio

Karo Bio has operations in Huddinge, Sweden, and 95 employees.

Karo Bio has been listed on the Stockholm stock exchange (Reuters:
KARO.ST) since 1998 and maintains a leading position in the field of
drug discovery focused on nuclear receptors. Nuclear receptors are
validated drug targets for a number of clinical indications and the
Company uses proprietary technologies for the development of novel and
improved therapies for major markets.

Karo Bio has drug discovery programs in several therapeutic areas
including women’s health care, cancer, cardiovascular disease,
atherosclerosis and diabetes.

Karo Bio collaborates with major pharmaceutical companies for the
development of products and marketing. In these collaborations Karo Bio
receives upfront payments, R&D funding and milestone payments, as well
as royalties on net sales when products reach the market.

Karo Bio has strategic pharmaceutical drug discovery collaborations with
Merck & Co., Inc. and Wyeth Pharmaceuticals.

This press release is also available online at www.karobio.com and at
www.waymaker.net.

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The following files are available for download:
https://www.waymaker.net/bitonline/2004/09/08/20040908BIT00020/wkr0001.pdf